PTAB Panel Rules That  The Forum Bar of 35 U.S.C. § 315(a)(1) is Not Triggered By Invalidity Counterclaims Directed to Non-Asserted Claims of an Asserted Patent

December 2, 2020

The PTAB panel in Amp Plus, Inc. dba ELCO Lighting v. DMF, Inc., IPR2019-01094, Paper 58 (PTAB Sept. 2, 2020), was asked to decide if the forum bar of 35 U.S.C. § 315(a)(1) applies to a petitioner’s or real party in interest’s declaratory judgment counterclaims for invalidity of claims of a patent-in-suit that are not asserted, or whether such invalidity counterclaims come within § 315(a)(3).  Section 315(a)(1) bars institution of an IPR if, before the date on which the IPR petition is filed, “the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.”  Section 315(a)(3) provides that “[a] counterclaim challenging the validity of a claim of a patent does not constitute a civil action challenging the validity of a claim of a patent for purposes of this subsection.”

DMF unsuccessfully moved to dismiss an instituted IPR of a patent that it was simultaneously asserting against AMP in an infringement action, contending that the IPR was barred by § 315(a)(1) in view of AMP’s declaratory judgment counterclaim for invalidity of certain challenged claims that was filed in the district court action before the IPR petition was filed.  DMF argued that § 315(a) is applied on a claim-by-claim basis, that the exemption of § 315(a)(3) only applies if the counterclaim is compulsory, and that a counterclaim is not compulsory if it is not commensurate in scope with a patentee’s infringement assertion.  DMF represented that some of the patent claims challenged in the IPR were included in AMP’s invalidity counterclaims that pre-date the IPR petition and that DMF is not asserting those claims against AMP.  DMF argued that this places the counterclaims beyond the scope of DMF’s asserted infringement claims and triggers the forum bar of § 315(a)(1).  DMF asserted that Dr. Reddy’s Labs v. Horizon Pharma USA, Inc., IPR2017-01995, Paper 77 (PTAB Aug. 12, 2019), and Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1327 (Fed. Cir. 2008), support its reading and application of § 315(a).  Dec. at 3.

AMP distinguished Horizon in its response, explaining that its counterclaims are directed to the sole asserted patent introduced into the case by DMF and are therefore compulsory, whereas the invalidity counterclaims at issue in Horizon were directed to not only the asserted patents but to a new patent that was not asserted.  AMP cited Fed. R. Civ. P. 13(a) as support and also relied on Wright & Miller, which states that “[a]ny counterclaim involving the same patent as involved in the original action usually is considered to arise from the same transaction as the main claim.” 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1410, at 73 (2nd ed. 1990). Dec. at 3-5.

AMP also contended that even if DMF’s reading of § 315(a) is correct, its counterclaims are still exempted under § 315(a)(3).  AMP argued that the district court action was not limited to certain claims, citing the ambiguity surrounding DMF’s infringement contentions and confusion over which claims it was actually asserting.  AMP particularly cited to statements in the district court record showing that even the judge found DMF’s infringement contentions ambiguous and confusing as to the specific claims being asserted, particularly as to independent claims 17 and 22—which DMF told the PTAB it was not asserting. Opp. (Paper 54) at 4-5.

The PTAB panel rejected DMF’s claim-by-claim approach to applying § 315(a), finding it “illogical and unsupported.”  Contrary to DMF’s view, the panel found that “the language of § 315(a)(3) itself supports Petitioner’s position that its counterclaim in the district court action, which challenged the validity of a claim of a patent in that district court action, does not constitute its own civil action,” and that Fed. R. Civ. P. 13(a) confirms this reading. Dec. at 4.  Thus, the PTAB determined that “Petitioner reasonably would have concluded that invalidity allegations against any of the claims of the [asserted patent] were compulsory in answer to the complaint.” Id. at 5.  The panel also agreed that Horizon is distinguishable on its facts and observed that DMF’s complaint alleged infringement of “one or more claims [of the patent], including at least Claim 1 and its dependent claims . . . ” and that AMP’s answer to the complaint included counterclaims that “[the patent] and some or all of its claims are invalid,” but did not introduce a new patent into the case. Id.  

The panel further determined that, even if it were persuaded by DMF’s claim-by-claim argument, the record in the district court action shows that DMF did not clearly identify the asserted claims. Dec. at 6 (discussing the district court record, including the judge’s inability to discern which claims were and were not being asserted).  The panel explained that AMP’s invalidity counterclaim included claims that appeared to have been included in DMF’s infringement contentions at some point during the district court action and that DMF failed to show that counterclaims against an asserted patent’s claims—both asserted and not asserted at various times during the litigation—are not compulsory and could be brought in a later, separate action. Id.  The panel then denied DMF’s motion to dismiss.